Assume that for the same price you could either purchase a


Question: (a) Assume that for the same price you could either purchase a convertible debenture or a straight debenture and warrants that would entitle you to purchase the number of shares specified by the conversion ratio of the convertible. Assuming the same coupon, which would you prefer? Explain.

(b) Contrast convertible debentures and debentures with warrants from an issuers point of view. What are the main differences and how do they affect the issuing firm?

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Finance Basics: Assume that for the same price you could either purchase a
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